Department of Housing and Urban Development (HUD) Secretary Julian Castro told the National Press Club that the Federal Housing Administration (FHA) had done all it would for now in terms of helping the housing market.
Castro touted the benefits of the lowering of mortgage insurance premiums for FHA loans, announced earlier by President Barack Obama. And he said it was time to let the new programs run their course.
“This is a common sense step – FHA’s premiums will still be 50 percent higher than pre-crisis levels. This premium change only makes an FHA loan more affordable for qualified families,” Castro said in prepared remarks. “All other FHA requirements will remain the same, including verification of a person’s ability to pay. Families still have to qualify for an FHA loan – but when they do, they will find a more affordable path to homeownership waiting for them.”
Castro said the latest change for FHA premiums would help more than 2 million borrowers save on their mortgages. “Right now, FHA premiums are at a historically high level, and the cost of obtaining the American dream is too great for a lot of working folks,” he said. “We expect our premium reduction to help more than 2 million borrowers save an average of $900 annually over the next three years. It will also encourage nearly a quarter million new borrowers to purchase their first home.”
The changes come on the heels of other programs announced by HUD and the Federal Housing Finance Authority to ease credit standards and bring more potential borrowers into the market.
“As many of you know, FHA has long been a beacon of hope for underserved borrowers,” he said. “Some believe that a few years ago, it was too easy to get a home loan. Now, it’s too hard. So we’ve undergone a year-long effort to clarify our policies so that lenders can feel more confident in working with a wide range of creditworthy borrowers. This has helped increase the flow of credit – and we’re going to keep building on this progress.”
The tactics are a part of what Castro referred to in his speech as a year of housing opportunity in 2015. “By bringing these costs down, we’re helping folks lift themselves up – and expanding opportunity for generations of Americans,” he said.
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